Bogus Stogies

Forbes ^ | Nick Passmore

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"DID YOU ACQUIRE ANY CIGARS WHILE YOU were in the Bahamas, sir?"

Little did he know-or perhaps he did-but with these few words the U.S. Customs agent in the Bahamas ruined my day.

Of course I had bought cigars. Quite a few, in fact. Quite a few Cuban cigars that are still illegal to bring into the United States. It was one of my primary motives for taking the trip, now that the ravenous hordes of nouveau cigar aficionados have stripped Europe's duty-free shops of what are still the best smokes in the world.

Now what was going to happen? I was looking at the loss of several hundred dollars worth of cigars. A big fine? Quite possibly. Jail?

Unlikely, but attempting to import Cuban products contravenes the frightening-sounding Trading With The Enemy Act, so presumably the sky's the limit if the Feds really wanted to get nasty.

But when I displayed my carefully procured cigars for his inspection, instead of hauling me off to the interrogation room, the customs agent just laughed. He took one look at them, and with an expert's all too evident disdain for a patsy, derisively informed me that I had been had.

They weren't genuine Havanas at all, but counterfeits. Fakes. And with a contemptuous wave of his hand, he dismissed me and my cigars, freeing us to board the plane.

I felt humiliated. I was relieved, of course, not to have tangled with the United States Customs Service, but the relief was subsumed by that gnawing sense of abject foolishness that sweeps over you when you realize you've been conned.

This sort of thing was not supposed to happen to me, the experienced and sophisticated traveler. I didn't change my money in dark alleys behind the Metropol in Moscow, or give my bags to helpful boys at Ramses Station in Cairo. How come I had managed to get ripped off in the Bahamas?

In the answer to that question there lies a very interesting phenomenon.

On getting home I began to ask around, and quickly became aware that far from being the victim of an isolated scam-as I had at first supposed-I had inadvertently stumbled into the widespread and growing trade in counterfeit Havana cigars. It seems that a vast majority of the cigars sold in North America and the Caribbean as "Havanas" are, in one way or another, fake.

It isn't surprising when you think about the circumstances. In the last few years, cigar smoking in the U.S. has become the trend du jour for movie stars, sports celebrities and their vast hordes of well-heeled imitators.

When you combine this rapid increase in demand with the devastation inflicted on Cuban production by 37 years of a command economy and a few bad harvests, you have all the ingredients for a prosperous black market.

The U.S. embargo against Cuba further stokes the demand for its cigars by making them a scarce, and therefore much desired, commodity.

And there are plenty of people willing to supply this demand. You can't spend very long in Havana without being approached by someone offering to sell you cigars, and in many restaurants there is a man sitting at a back table, often a retired professional roller, ready to make any cigar you want. They're even rolling them in the streets. The motivation is easy to discern: the Cuban economy is in such tatters, and the people so desperate for the prized U.S. dollar, that the opportunity to earn a week's wages by selling one box of counterfeits is all the incentive many need. So dire is the economic situation that, despite this being a police state, the making and selling of counterfeit cigars has become a thriving, albeit illicit, cottage industry in Havana.

Some of the best black-market cigars are very good indeed-so good that even experts have trouble detecting them. At the other end of the spectrum are cigars made from sweepings off the factory floor. Crudely rolled, fitted out with fake bands and packaged in stolen boxes, they are sold all over the Caribbean and the U.S. at vast markups to unsuspecting novices who are thrilled to have their first taste of a real "Havana."

"David" is a recently retired New York "broker" of illegal Havanas. Initially, he smuggled in the genuine product via Mexico, Canada or the Bahamas, but after he was stopped and lost several thousand dollars worth of cigars, he changed his modus operandi. First he removed the cigars from the boxes and took off the bands. Then he shipped the bands and boxes to the U.S. in one package, and the cigars- as legal Dominicans or Hondurans-in another. Once in the U.S., the parts were reassembled and sold to individuals, clubs and restaurants.

While this was obviously illegal, his customers were at least getting the product they paid for. But as official prices in Havana rose over the last couple of years, David, like many others in the business, switched to the black market in order to maintain his margins without having to raise prices. None of his customers seemed to notice the difference.

According to him, American smokers, especially the legions of recent converts, are more interested in the name on the cigar than the product itself. For these nouveau smokers, cigars are about appearing trendy and in the know-and they are easy marks for the dealers. For the poseur in a cigar bar, it is infinitely more desirable to smoke, and be seen smoking, a fake Montecristo with a band than a genuine one without.

David even had U.S. customers, managers of stores and cigar bars, tell him not to bother with the cigars but just to supply them with the bands. They would then put the genuine bands on $3 Macanudos, turning around and selling them as Montecristos for $30 each to their very grateful "special" customers.

As Lew Rothman, president of JR Cigar, observes, "Given the number of Montecristos I see being smoked, there has either been an increase in counterfeit cigars or Cuba is producing more than ever before." Which of course it isn't.

David estimates that at least 80% of the supposed Havanas sold in the Caribbean-even in the duty-free shops-are counterfeit. You can get a box of good-quality fake Montecristos for about $40 in Cuba, while the genuine article costs $300. Either box will sell for a minimum of $500 in stores all over the Caribbean, with not one customer in a hundred being any the wiser.

Some of these are genuine cigars stolen from the factory before they are aged properly. Some are made at home by factory employees with stolen or reject tobacco. Some are made in garages by small, illegal two- and three-man operations using inferior tobacco, and some are made in other cigar-producing countries from substandard leaf left over from legitimate production. All are packaged with stolen bands in stolen boxes for sale at less than a quarter of the price of the genuine article.

There are plenty of hustlers making money buying up bogus cigars in Cuba and elsewhere and taking them to Caribbean resorts where they're sold to unsuspecting tourists. Cancn is a major transshipment point, but the problem is pervasive throughout the Caribbean, with fakes showing up in Main Street tourist shops and on duty-free counters alike.

The money is just too good.

This thriving black market will continue as long as the U.S. trade embargo persists and the Cuban economy remains incapable of expanding production to meet the ever increasing worldwide demand. Until then, anyone considering buying a Havana cigar should proceed with caution, and be aware that what they are getting almost certainly isn't the real thing. l NICK PASSMORE's photographs have appeared frequently in FYI.

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I dont trust any cigar I cant buy at my local store. I got way to green after smoking a "cuban" cigar 7 years ago.